We recently compiled a list of the 8 Best Socially Responsible Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other best socially responsible stocks to buy according to hedge funds.
Socially responsible companies are businesses that integrate social and environmental considerations into their core operations and decision-making processes. One of the key characteristics of socially responsible companies is their focus on environmental stewardship and they actively work to reduce their environmental impact by implementing sustainable practices, reducing waste, conserving resources, and minimizing carbon emissions.
Another important aspect of socially responsible companies is their focus on social equity. These companies promote fair labor practices, support community development, and respect human rights. This includes providing fair wages, safe working conditions, and opportunities for employee growth and development.
Ethical governance is also a cornerstone of socially responsible companies. They maintain high standards of transparency, accountability, and integrity in their operations and decision-making processes. This includes ethical business practices, fair competition, and responsible marketing.
Investors are drawn to socially responsible companies because of the alignment with their personal values. Many investors are driven by a desire to make a positive impact on society. By investing in socially responsible companies, they can support businesses that share their values and contribute to social and environmental causes they care about.
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The global shift toward sustainable investing is gaining significant traction. The Sustainability Megatrends Report by Cushman & Wakefield highlighted that 60% of global investors reported higher performance yields from Environmental, Social, and Governance (ESG) investments. This positive financial outcome is driving a surge in demand for ESG funds, with 78% of investors willing to pay higher fees for these products. One of the most significant trends is that Institutional investors are increasingly recognizing the financial advantages of ESG-focused investments, leading to a transformation in how companies allocate capital. Therefore, strong ESG performance is becoming a critical factor in attracting investment, with companies that excel in this area seeing a surge in capital inflows.
Mandatory ESG reporting is another critical trend, as governments and regulators worldwide are enforcing greater transparency in environmental and social impact metrics. Companies that integrate these reporting standards into their strategies are better positioned to manage risks and seize new opportunities. The global energy transition and decarbonization efforts are also reshaping industries, with companies investing heavily in renewable energy and implementing strategies to reduce their carbon footprints.
Investors are increasingly drawn to socially responsible companies due to the potential for risk mitigation, long-term value, and alignment with personal values.
A development team working together to create the next version of Windows.
Our Methodology
To compile our list of the 8 best socially responsible stocks to buy according to hedge funds, we sifted through internet rankings to find 20 socially responsible companies. We then used Insider Monkey’s Hedge Fund database to rank 8 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Investors: 279
Microsoft Corporation (NASDAQ:MSFT) is a global technology leader with a diverse portfolio of products and services, ranging from operating systems and productivity software to cloud computing and artificial intelligence (AI). The company is known for its ethical efforts including achieving carbon negativity, empowering underserved communities through technology access, and maintaining rigorous data privacy standards.
Microsoft Corporation (NASDAQ:MSFT) is at the forefront of the AI revolution, with a significant portion of its growth strategy centered around AI-driven solutions. The company is investing heavily in AI infrastructure, including data centers, GPUs, and proprietary accelerators such as Maia 100. The partnership with OpenAI has been pivotal, enabling Microsoft Corporation (NASDAQ:MSFT) to offer services such as Azure OpenAI and GitHub Copilot, which are being adopted by a wide range of customers, from startups to large enterprises. By continuing to innovate and build end-to-end AI platforms, Microsoft Corporation (NASDAQ:MSFT) aims to help customers transform their workflows and drive new growth.
Azure, Microsoft Corporation’s (NASDAQ:MSFT) cloud computing platform, continues to gain market share and is a cornerstone of the company’s growth strategy. The company is focusing on optimizing its Azure fleet for AI workloads to offer a broad selection of AI accelerators and the latest GPUs from AMD and NVIDIA. By enhancing Azure’s capabilities and expanding its reach, the company aims to capture a larger share of the growing cloud market and support the AI-driven transformation of businesses worldwide.
Overall, MSFT ranks 1st on our list of the best socially responsible stocks to buy according to hedge funds. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
